Copyright infringement is a “strict liability tort,” which means the defendant doesn’t have to have intended to infringe to prove liability. A plaintiff must only demonstrate that the defendant had access to the allegedly infringed song, and that the two songs in question have substantial similarity. Substantial similarity: whether or not the average listener can tell that one song has been copied from the other. This is the “ordinary observer test” - the hallmark of copyright infringement. The more elements two works have in common, the more likely they are to be ruled substantially similar. Essentially, the jury must decide whether the copying of protected elements was “too much.” Proving substantial similarity in music cases is complicated by the fact that all songs carry two kinds of copyright, for composition and sound recording, that have to be evaluated independently. Innocent or Willful Infringement? Factors into statutory damages, and whether expenses can be deducted from profits in determining profits awards.

1. BLURRED LINES OR FUZZY MATH
How Did They Come Up With $7.3 Million? Or Was It $5.3 Million
DAMAGE CALCULATIONS IN THE MUSIC INDUSTRY
Moderator:
Robert S. Meloni, Esq., Partner, Meloni & McCaffrey
Speakers:
Doug Bania, CLP, Principal, Nevium Intellectual Property Solutions
Matt Greenberg, Ritholz Levy Sanders Chidekel & Fields
Bruce Kolbrenner, CPA, Partner, Prager Metis

2. THE BASICS
Elements Needed to Prevail on Copyright Infringement Claim
OWNERSHIP + COPYING (ACCESS/SUBSTANTIAL SIMILARITY)
¨ Copyright infringement is a “strict liability tort,” which means the defendant doesn’t have to have intended to infringe to prove liability. A plaintiff
must only demonstrate that the defendant had access to the allegedly infringed song, and that the two songs in question have substantial
similarity.
¨ Substantial similarity: whether or not the average listener can tell that one song has been copied from the other. This is the “ordinary observer
test” - the hallmark of copyright infringement. The more elements two works have in common, the more likely they are to be ruled substantially
similar. Essentially, the jury must decide whether the copying of protected elements was “too much.”
¨ Proving substantial similarity in music cases is complicated by the fact that all songs carry two kinds of copyright, for composition and sound
recording, that have to be evaluated independently.
¨ Innocent or Willful Infringement? Factors into statutory damages, and whether expenses can be deducted from profits in determining profits
awards.

3. DEFENSES
¨ Ownership
¨ Scènes à faire
¨ Fair use
¨ Statute of limitations
¨ De minimis
¨ Independent creation

4. IDEAS VS EXPRESSION
CONCEPT & FEEto L: “Pharrell and I were in the studio and I told him that one of my favorite songs of
all time was Marvin Gaye’s Got Give It Up. I was, like, Damn, we should make something like that,
something with that groove. Then he started playing a little something and we literally wrote the song
in about a half hour and recorded it.”
CONSIDER THESE VISUAL IMAGES USING SAME IDEA, BUT DIFFERENT EXPRESSIONS OF THAT IDEA

5. ¨ Asserting claims
¨ Handling those claims
¨ Settlement designed to avoid litigation
¨ Artist indemnities
¨ What are typical parameters of settlement?
¨ How do they compare with results obtained if litigation ensues? Concluded?
5

6. ¨ Musicologists are often called as expert witnesses to assist the fact finder. A
musicologist for the plaintiff will underscore the similarities between the two
songs as written, while the defendant’s musicologist will stress the differences.
¨ Damages Experts such as accountants and economists are also called to assist the
fact finder by providing opinions as to damages (actual damages, profits,
deductible expenses)
6

7. ¨ Over the past fifty years there has been an inexorably growing number of
music copyright infringement claims.
¨ Between 1950 - 2000 U.S. courts issued more than twice the number of
opinions in this area than they did between 1900 and 1950.
¨ Since 2000 courts have issued over 50% of opinions published between 1950
and 2000.
Source: “I Hear America Suing: Music Copyright Infringement in the Era of Electronic Sound” (USC Gould School of Law, Legal
Studies Research Papers Series No. 14-6, March 2014)
7

8. 15
10
7
8
15
31
35
34
1940-1949 1950-1959 1960-1969 1970-1979 1980-1989 1990-1999 2000--2009 2010-2013
Music Copyright Cases Filed
1940-2013
Source: Music Copyright Infringement Resource (USC Gould School of Law)
8

9. ¨ Judicial opinions represent only a small portion of music copyright
infringement claims; most are settled long before trial.*
¨ Settlements – typically a “get lost” payment to the plaintiff – keeps disputes off
court dockets, but may promote attenuated claims by plaintiffs seeking similar
payoffs based on convenience and economic expediency.
¨ Predilection towards settlement, however, ultimately reflects its chariness of
the unpredictable results of litigation (particularly jury trials) and expense of
litigation.
*Source: “I Hear America Suing: Music Copyright Infringement in the Era of Electronic Sound” (USC Gould School of Law, Legal Studies
Research Papers Series No. 14-6, March 2014)
9

10. 10
• Most copyright infringement cases (80.15%) terminated voluntarily - through settlement, agreed
judgment, or voluntary dismissal.
• In contrast, very FEW terminated via trial (2.87%) or by dispositive motion or other dismissal (16.98%).
• In an overwhelming majority of cases (85.41%) the case was dismissed with neither party winning an
adversarial judgment over the other (although roughly 20% of those cases involved a consent judgment
filed with the court).
• Of the 16.18% of cases in which there was an explicit winning party, the defendant won a little more than
half (54.10%) and the plaintiff a little less (45.90%).*
Source: “Copyright’s Topography: An Empirical Study of Copyright Litigation,” Christopher A. Cotropia & James Gibson, Texas L. Rev. [Vol. 92:1981].

11. ¨ Between 1960 and 2010 over 40 music copyright infringement cases turned on
summary judgment motions.
¨ Invariably the defendant sought summary judgment at the district court; in
several instances appeal courts overturned the district court’s granting of
defendant’s motion.
¨ In 16 of 42 cases the courts denied defendants’ motions for summary
judgment .
Source: “I Hear America Suing: Music Copyright Infringement in the Era of Electronic Sound” (USC Gould School of Law, Legal Studies Research Papers
Series No. 14-6, March 2014)
11

12. ¨ Daubert standard: Rule of evidence regarding the admissibility of expert witness testimony in
federal courts. Experts are only permitted to testify when their testimony is (1) based upon
sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3)
the witness has applied the principles and methods reliably to the facts of the case.
¨ Nature of retention: It is necessary for the damage expert to receive a complete understanding of
the assignment from Client Counsel?
¨ Qualifications: Necessary for the damage expert to have a thorough knowledge of music industry.
¨ Information Considered: Relevance and reliability - Damage expert must compile information
from various sources to determine Damages.
¨ Methodology used in determining Damages: The calculations in the Blurred Lines case were
different from most others.
¨ Expert Reports: Jury decision of damages and how they relate – or NOT – to damage reports
prepared by damage experts for the respective parties.
12

13. ¨ Plaintiff's Actual Damages (e.g., lost license revenues).
¨ Defendant’s Profits Not Attributable to Actual Damages (e.g., revenues from sale
of records, concert and merchandise profits, TV or movie synchronization fees).
¨ Plaintiff required to present proof only of the infringer’s gross revenue, and
Defendant required to prove his or her deductible expenses and the element of
profit attributable to factors other than the copyrighted work.
13

14. ¨ Both sides in Blurred Lines case gave estimation of potential damages.
¨ The Gaye family claimed Thick and Williams' profits from the track totaled roughly
$40 million and that according to general practices for licensing, they are due
about half of that.
¨ Williams/Thicke responded that Blurred Lines was not nearly that profitable,
arguing that the track's success wasn't due entirely to the music -- noting that the
racy video and social media promotions should also be considered.
14

15. ¨ Gayes sought an award of actual damages under a “HYPOTHETICAL LICENSE THEORY”.
¨ “Market value of the injury”: based on a hypothetical-license theory - amount a willing buyer
would have been reasonably required to pay a willing seller at the time of the infringement for the
actual use made by the infringer of the plaintiff's work.
¨ Gayes’ damages expert, Nancy Stern, testified that appropriate license for the portions of GOT TO
GIVE IT UP copied by BLURRED LINES would have been 50% percent of publishing revenue if the license
had been obtained before the release of BLURRED LINES, and 75% to 100% percent if it were
obtained afterwards.
¨ “Reasonable market value” of a hypothetical license may be determined by reference to similar
licenses that have been granted in the past or evidence of benchmark licenses in the industry
approximating the hypothetical license in question.
15

16. ¨ Every piece of recorded music has two copyrights: (i) the sound recording; and (ii) the underlying composition. The Gaye family
only had legal rights to a portion of the profit the composition copyright generated.
¡ Based on typical industry custom and practice, Thicke/Williams argued the Gaye family is only entitled to 25% of profit
generated if infringement is determined.
¡ Based on the 25%, there are other factors that contributed to the success of Blurred Lines.
¡ Difficulties when the infringing work inextricably intermingles non-infringing material with the plaintiff’s protectable
material.
¨ Sales of Blurred Lines as reported by SoundScan was used as a reasonable indicator of the success of Blurred Lines at different points
in time following its release.
¨ Factors Contributing to the Success of Blurred Lines:
¡ The musical elements
¡ Celebrity and star power
¡ Awareness related to the videos
¡ Marketing activities undertaken by UMG
¡ Social media activities
16

17. A recorded song sitting on a desk is not going to generate revenue on its own
Present
Value of
Expected
Future
Benefits
Value of
Business
Intangible
Assets
Tangible Assets
Copyrights
Patents
Intangible
Assets
Tangible Assets
Trademark
INTELLECTUAL PROPERTY DEPENDS ON OTHER ASSETS AND RESOURCES
IN ORDER TO GENERATE ECONOMIC BENEFITS

18. EVERY SONG HAS TWO COPYRIGHTS

19. 0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
SoundScan/Week
Single
Blurred Lines Album
THE SUCCESS OF BLURRED LINES WAS DEFINED BY THE SOUNDSCAN DATA

20. 0
5
10
15
20
25
30
35
40
45
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Number of Marketing Events During the Week
SoundScan/Week
SoundScan
Events
THE VOLUME OF MARKETING EVENTS AND SOUNDSCAN DATA

21. SoundScan/Week
MARKETING EVENTS AND SOUNDSCAN DATA

22. Event Description Date Event Description Date
A Video Sneak Peak 3/19/2013 P BET Awards Performance 6/30/2013
B Youtube Unrated Video Release 3/26/2014 Q Interviews with VH1, FUSE & Music Choice 7/18/2013
C Unrated Video pulled from YouTube 3/29/2013 R Twitter Chat, #ASKTHICKE Debacle 7/23/2013
D Beats Commercial Aired 4/28/2013 S Interviews with Ryan Secreast, Vanity Fair, Howard Stern and SIRIUS between 7/24/13 and 7/29/2013
E Video added to Fuse Pop & VHI 4/29/2013 T Album Released in US 7/30/2013
F NYC Promo: Power 105, GQ, VH1, HOT 97 5/1/2013 U The Today Show, BETY 106, PARK, America's Got Talent Performances 7/30/2013
G The Voice Performance with Thicks, Pharrell and T.I. 5/14/2013 V The View and Jimmy Fallon Performances 8/2/2013
H Interviews with Kiss FM & Power 106 5/15/2013 W Thicke Appears on The Colbert Show 8/6/2013
I Ellen Performance 5/16/2013 X The MTV Video Music Awards Performance with Miley Cyrus 8/25/2013
J Le Grand Performance & Interviews with Madmoizelle and Paulette Mag 5/18/2013 Y Oprah Show Appearance 10/14/2013
K Interviews with Metro, Booska, Purecharts and Skyrock 5/20/2013 Z 12 Live Shows in Major Markets between 12/2/2013 and 12/29/2013
L Graham Norton Performance 6/6/2013 AA Ryan Secreast Rockin' Airs 12/31/2013
M NYC Promo: Z100, WTKU, Hot 97, CBS Online, WNOW and WBLS 6/10/2013 AB Performance at the Grammy's 1/26/2014
N Jimmy Kimmel Performance 6/13/2013 AC ESPN Superbowl Party Performance 1/31/2014
O Interview with Centric 6/27/2013
LIST OF MARKETING EVENTS

23. $0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Marketing Spend
SoundScan/Month
Marketing Expense
SoundScan
GROSS MARKETING EVENTS AND SOUNDSCAN DATA

24. 0
10
20
30
40
50
60
70
80
90
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Radio Stations
SoundScan/Week
SoundScan
Radio Stations
0
100
200
300
400
500
600
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Market Size in Millions
SoundScan/Week
SoundScan
Market Size
Number of radio stations in which “Blurred Lines”
was first played.
Combined size of audience in which “Blurred Lines”
was first played on the radio.
FIRST RADIO SPIN HISTORY AND SOUNDSCAN DATA

25. 86%
14%
March 2013
Male
Female
88%
12%
“Blurred Lines” Video
Male
Female
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Views
54%
46%
All Other Months
Male
Female
ROBIN THICKE’S YOUTUBE CHANNEL DATA

26. 0
10
20
30
40
50
60
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
iTunes Video Reviews
SoundScan/Week
SoundScan
Reviews
NUMBER OF ITUNES VIDEO REVIEWS AND SOUNDSCAN DATA

27. 0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Retweets
SoundScan/Month
T.I.
Pharrell
Thicke
SoundScan
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Favorites
SoundScan/Month
T.I.
Pharrell
Thicke
SoundScan
TWITTER ACTIVITY AND SOUNDSCAN DATA

28. 0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Likes on Posts Mentioning Blurred Lines
SoundScan/Month
Likes
SoundScan
Posts mentioning “Blurred Lines”
NUMBER OF LIKES ON ROBIN THICKE’S FACEBOOK POST AND SOUNDSCAN DATA

29. 0
20
40
60
80
100
120
140
160
180
200
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Media Mentions
SoundScan/Month
Media Mentions
SoundScan
The Voice
Performance
NUMBER OF MEDIA MENTIONS AND SOUNDSCAN DATA

30. 0
50,000
100,000
150,000
200,000
250,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
smartURLClicks
SoundScan/Month
smartURL Total Clicks
SoundScan
SMARTURL CLICKS AND SOUNDSCAN DATA

31. TOTAL PROFITS - ARTIST/PRODUCER/LABEL:
Combined (Net) Publishing (writer splits) Artist Producer Found Liable?
Thicke: $ 5,658,214 1,404,569 (23%) 4,253,645 YES
Williams: $ 5,153,457 4,293,124 (64%) 860,333 YES
Harris (TI): $ 704,774 679,362 (13%) 25,412 _______ NO
Total: $11,516,445 $6,377,055 (100%) $4,279,057 $860,333
Interscope: $ 1,343,674 NO
UMGD: $ 217,150 NO
Star Trak: $ 3,598,412 NO
Total: $16,675,690
TOTAL PROFITS - PUBLISHING:
Thicke: $1,404,569
$5,697,693
Williams: $4,293,124
Harris: $ 679,362
Total: $6,377,055
31

32. ¨ Overhead (Blurred Lines) - Gayes maintained should not be deducted
Interscope/UMGD: $7,373,616
¨ Thicke Tour Income (Blurred Lines) - Gayes maintained should be included
Thicke Tour Revenues: $11,792,000
32

33. ¨ During deliberations, the jury posed a written question to the Court that read:
“Q: Can you clarify or explain the intentions of what this sentence means? ‘You may not include in
an award of profits any amount that you took into account in determing [sic] actual damages.’”
¨ Counsel agreed to the following written response to be presented by the Court:
“The parties agreed that approximately $8 million was received by the writers of 'Blurred Lines' in
publishing revenue. In calculating actual damages, it is the $8 million you should take into
consideration. If you decide to consider awarding profits, you should not take into consideration
the same $8 million.”
Post-Trial Motion: Counsel for Thicke Parties argued this instruction was a “mistake,”, and that
“[t]he Court’s reference to “approximately $8 million” was “grossly inaccurate,” because “the
stipulated amount of publishing revenue was $6,377,055 for all three writers.
33

34. 34
Jury Verdict Form

35. ACTUAL DAMAGES (LOST LICENSING INCOME - PUBLISHING):
Jury Awarded: $4,000,000 as against Thicke/Williams ONLY
► Parties stipulated gross publishing revenues for Blurred Lines totaled $8 Million (did not
account for commissions to managers/accountants/lawyers).
►Jury award of $4 Million consistent with theory jury applied 50% licensing fee about
which Stern testified.
►Thicke/Williams argued that the award of profits as to both Thicke and Williams should
be remitted to “no more than 5% of the actual non-publishing profits” of Thicke and
Williams stipulated to at trial . This position premised on testimony of Sandy Wilbur
that “the handful of elements in GOT TO GIVE IT UP claimed to be copied in BLURRED,
even if credited, amount to no more than 5% of BLURRED.”
35

36. HOWEVER, jury award for actual damages (publishing) was later remitted (lowered)
by Court to $3,188,527.
►”Remitter”: If the amount of damages awarded by a jury is excessive,
trial judge required order a new trial OR remittitur (reduced amount of
damage which the court considers just).
►Court determined that $4 Million award “not reasonably supported by
the evidence.”
►Remitted amount of $3,188,527 = 50% of $6,377,055 (total publishing profits for
Thicke & Williams net of commissions to lawyers/accountants/managers).
36

37. PROFITS (NOT COUNTED IN CALCULATING ACTUAL DAMAGES:PROFITS (NOT COUNTED IN CALCULATING
ACTUAL DAMAGES):
¨ Jury found that Williams received profits of $1,610,455.31, and that Thicke had received
profits of $1,768,191.88, which were not taken into account in calculating actual
damages.
¨ Reverse engineering – figuring out basis jury award:
AWARD AGAINST THICKE: $1,768,191 = 41.5689% of $4,253,645 Thicke artist royalties
AWARD AGAINST WILLIAMS: $1,610,455 = 187% of $860,333 Williams’ producer royalties
¨ $1,768,191.88 ÷ 4,253,645 = 41.5689%
¨ Williams profits-to-damages ratio of 187% was 4.7 times GREATER than the 41.5689%
ratio used to calculate damages re Thicke profits.
37

38. Artist royalties: $4,253,645
Producer royalties: $ 860,333
Total: $5,133,978
38
Total Profits
(Artist + Producerroyalties)
Jury Award Ratable share of total profits
(Thicke + Williams)
$5,033,978 1,768,182 (Thicke) 35.12%
$5,033,978 1,610,455 (Williams) 31.99%

39. ¨ The award of Williams’ profits was remitted from $1,610,455.31 to $357,630.96.
¨ Court applied 41.5689% - what jury applied to award of Thicke profits - to the
$860,333 in producer royalties paid to Williams.
¨ 41.5689% of $860,333 = $357,630.96
¨ Total reduction: $1,252,824.44
39